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Old 11-15-2010, 06:56 AM   #21
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Originally Posted by stephenandrew View Post
Thanks for posting this--I had a read a reference to this issue, but interesting to see it from the "horse's mouth". The best word I can think to describe this, is "troubling". As you pointed out, on one hand, Genworth has a sales force encouraging people to buy these policies, and on the other hand, the pricing set by the actuaries assumes (hopes?) that a certain number of folks will abandon their policies. I understand that there will be a sort of natural "attrition" for any product bought over time, but it just rubs me the wrong way that this is part of the business model--success/profitability is predicated on how many people abandon thier policies before Genworth has to payout any benefits.
Every long term insurance policy (i.e. life insurance, health insurance, disability, etc) has a certain lapse ratio built into the price of the product, not just LTC.

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Old 11-15-2010, 09:03 AM   #22
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Originally Posted by dgoldenz View Post
Every long term insurance policy (i.e. life insurance, health insurance, disability, etc) has a certain lapse ratio built into the price of the product, not just LTC.
I would argue that any consumer product where the issuer or manufacturer has to provide lifecycle support is also priced based on a percentage of users either forgetting they have it, or simply not using it.

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